Cannabis businesses are always in need of Maryland accounting services, but what should they look for in an accountant?
Many are around the Maryland area which can leave you feeling overwhelmed. Luckily, we laid out a vetting process for you to find the right accounting services for your business.
Keep reading to learn more!
Cannabis Industry In Maryland
The cannabis industry in Maryland has’ regulations for you to navigate through.
These regulations consist of:
- Adult-Use Legalization: Maryland voters approved recreational cannabis in the November 2022 election, with sales beginning in July 2023.
- Oversight: The Maryland Cannabis Administration oversees both the medical and adult-use markets, setting regulations for licensing, cultivation, processing, distribution, and retail.
- Medical Cannabis Program: Established in 2017, Maryland’s medical cannabis program continues to serve patients, operating alongside the recreational market.
- Taxation: Recreational cannabis sales are subject to a 9% state tax, with medical cannabis exempt from sales tax.
- Banking: Businesses face federal banking challenges, though local credit unions offer solutions.
Cannabis regulations are always subject to change and it’s necessary to meet those changes to stay ahead of the market.
Why Specialized Accounting For Cannabis Businesses
Why would you need specialized accounting for your cannabis business? Accounting is the foundation of your business. It keeps your finances in check and ensures your business remains compliant with changing regulations. There are many financial nuances from IRS 280e, banking limitations, consistent reporting, and others.
Knowing or having an expert, specialized in cannabis, on your side to help you navigate can keep your business in operation for many years.
This is why you need cannabis accountants as they know the lay of the land and understand the regulations your business needs to stay afloat.
Accounting Challenges For Cannabis Dispensaries
Though it’s easy to talk about the regulations, how does it affect your cannabis dispensary?
- Compliance with State And Federal Regulations
As we mentioned earlier, dispensaries must stay in compliance with state and federal regulations. This can have a major impact on your financial operations, limiting what you can report on taxes year-round.
- Taxation Issues
Maryland, like other states, has its’ cannabis taxes that increase your tax amount from excise and sales tax. Keeping track of your taxes can be cumbersome and may inhibit you from staying in business, if not properly recorded. Even more, you get limited marijuana business tax deductions giving you less opportunity than non-cannabis businesses.
- Cash Management And Banking Challenges
You are also met with limited access to banking services, forcing you to work in cash-only transactions. It’s important to track your cash flow accurately so every finance coming in and out of the business is completely transparent.
- Inventory Management
For dispensaries, you need to have a proper track and trace system to properly keep an eye on your inventory. This is another compliance obstacle you must follow to stay in business. Also, avoiding discrepancies in inventory audits by reporting well can give you better compliance stability.
These are some of the accounting challenges your business must navigate to stay in business.
Key Services Offered By Maryland Cannabis Accountants
There are several services offered by Maryland cannabis accountants that we are going to explore now.
Bookkeeping And Financial Record Maintenance
Bookkeeping and financial recording is a service offered by accountants specializing in cannabis. This is to keep your financial books in order and ensure all cannabis business finances are reported from sales, inventory costs, and other expenses.
Tax Preparation And Compliance
Another service is tax preparation and compliance. Accountants offering this service ensure you stay tax-prepared.
Payroll Management
Payroll management is keeping track of all your payroll of employees. Think of this as ensuring everyone on your team gets paid correctly and on time. It includes tracking hours worked, handling taxes, benefits, and deductions, and making sure paychecks go out smoothly. It’s like having someone who makes payday stress-free for both you and your employees.
Financial Planning And Budgeting
This is about creating a roadmap for your money. It helps you figure out where to spend, save, or invest so your business can grow without running into financial trouble. It’s like planning a big trip—you set goals, decide on stops along the way, and keep an eye on your budget to make sure you don’t run out of gas. Accountants are best at doing this service to ensure you get the most out of your business.
Audit Preparation And Support
In the cannabis industry, preparing for an audit is much more important and accountants can help your business conduct. If an audit is like a pop quiz for your finances, this service is your study guide and tutor. It makes sure all your financial records are organized and accurate, so if anyone comes knocking to review your books, you’re ready to shine. It’s about staying prepared and reducing stress during what can feel like a big test. Accountants can help you prepare for section 280e and help you stay ahead.
Cash Flow And Banking Solutions
This helps you manage the flow of money in and out of your business, ensuring you always have enough to cover expenses while planning for the future. It also helps you handle banking tasks, like setting up accounts or finding better ways to manage loans or deposits. Imagine it as having a system to keep your money moving smoothly like a well-oiled machine. Cannabis accountants deliver this service to ensure you find the banking solution for your needs and conduct proper cash flow management.
Benefits Of Hiring A Cannabis-Focused Accounting Firm
- Expertise in Cannabis Regulations: Cannabis businesses face complex and ever-changing laws, especially when it comes to taxes and financial compliance. A cannabis-focused accounting firm knows these regulations inside out, including challenges like 280E tax rules. They help you stay on the right side of the law, avoiding costly mistakes and penalties. It’s like having a guide who knows all the rules of the game you’re playing.
- Risk Mitigation: With strict government oversight, even small accounting errors can lead to audits, fines, or even business shutdowns. A specialized accounting firm identifies potential risks before they become problems, giving you peace of mind. Think of them as your safety net, catching issues before they trip you up.
- Operational Efficiency: Cannabis accounting firms streamline your financial processes—handling payroll, bookkeeping, tax filings, and inventory tracking. This not only saves time but also helps you focus on running your business. Imagine handing off the complicated, time-consuming tasks so you can concentrate on growing your company instead of being buried in spreadsheets.
- Access to Industry-Specific Tools
Cannabis-focused accounting firms use tools tailored to the industry, like seed-to-sale tracking integrations or specialized tax software. These tools ensure your financial systems align with industry requirements and operate seamlessly. It’s like upgrading from a regular toolbox to one designed specifically for the unique challenges of the cannabis industry.
Choosing The Right Accounting Firm In Maryland
You need to choose the right accounting firm in Maryland with all the services your cannabis business needs to thrive. Look no further than Green Space Accounting. We have a team of experts who understand the needs of every cannabis owner.
Get in touch with our team by booking a one-on-one with us!
